This archive report was first published on 4 July 2020.
Tanzania's New Economic Status: A Double-Edged Sword ¶
On July 1, 2020, Tanzania became the second country in East Africa to be declared a lower middle-income country (MIC) by the World Bank, following Kenya.
The World Bank's declaration is based on income thresholds consistently achieved over a specific period, which translates into individual wealth. However, this classification also comes with hidden penalties, including reduced access to preferential markets, higher costs for essential medicines, and increased capital costs.
According to the World Bank, a country is considered Lower Middle Income when its per capita income rises above the international poverty-line daily expenditure of $1.25 to at least $2.86 per day or $1,035 annually. However, this methodology has been criticized for lumping together countries with wide income disparities.
While Tanzania's new economic status may bring benefits such as improved creditworthiness, it also poses significant challenges. The country's citizens may face higher prices for essential medicines, including HIV treatment, which can be unaffordable for many.
As Tanzania embarks on this new chapter in its development journey, it is essential to remember that the country's economic growth must be matched by meaningful change in the lives of its citizens. Only then can Tanzania truly celebrate its progress and look forward to a brighter future.
